Bobster Corp., which is only ten years old, has never paid a dividend. Based on your analysis, you think it will pay the following dividends in the future:

$1 one year from now

$3 two years from now

$5 three years from now

Other points:

After the $5 dividend, you expect dividends to grow at a rate of 5% for the foreseeable future.

After the dividend at the end of the fifth year, you think that the market will require a rate of return of 12% because you think the market will recognize the future growth and stability of the company at that time.

At that point (after the dividend at the end of the fifth year), you will sell the stock.

Because Bobster is not a mature company and has never paid a dividend, you require a rate of return on your 5-year investment of 35%.

How much are you willing to pay for the stock?